Independent Auditors’ Report on SBA’s FY 2020 Financial Statements
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We contracted with the independent certified public accounting firm KPMG LLP to conduct an audit of the SBA’s consolidated financial statements for the fiscal years ended September 30, 2020, and September 30, 2019. KPMG auditors found significant matters for which they were unable to obtain sufficient, appropriate audit evidence to provide a basis for an audit opinion on SBA’s consolidated financial statements for the year ended September 30, 2020.
Accordingly, KPMG issued a disclaimer of opinion on the consolidated financial statements as of and for the year ended September 30, 2020. The basis for this disclaimer was that during fiscal year 2020, the Coronavirus Aid, Relief, and Economic Security Act of 2020 (CARES Act) and related legislation authorized funding for SBA to implement the Paycheck Protection Program and the expanded Economic Injury Disaster Loan program.
SBA was unable to provide adequate evidential matter in support of a significant number of transactions and account balances related to those programs because of inadequate processes and controls. As a result, KPMG was unable to determine whether any adjustments might have been necessary with respect to the following:
- Credit Program Receivables and Related Foreclosed Property,
- Downward Reestimate Payable to Treasury,
- Liability for Loan Guarantees,
- the related elements in the consolidated statements of net cost and changes in net position,
- the combined statement of budgetary resources, and
- related notes to the consolidated financial statements.
SBA’s 2019 consolidated financial statements present fairly, in all material respects, the financial position of the SBA as of September 30, 2019.
However, for the year ended September 30, 2020, KPMG identified seven material weaknesses, two significant deficiencies in internal controls over financial reporting, and two instances of reportable noncompliance with provisions of applicable laws, regulations, contracts, and grant agreements.
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